Understanding the differences between residential and commercial real estate is huge. Make sure to do some research before investing.
Most adults know what the word real estate means: a property that is available for sale. Most adults also know that there are two different types of real estate; residential and commercial real estate. What most adults don’t know is that each type of real estate is very different from one another, even though both have to do with buying property. For instance, if you are interested in investing in either, you’ll have to know the major differences between the two, or some serious mistakes could be made. Before investing in residential or commercial real estate, understanding the differences between the two is essential. Here’s a quick guide to their similarities and differences.
Residential Real Estate
Residential properties are meant for long-term habitation by people. This means that properties like hotels and hostels are not included since they are not intended for a long-term stay. Properties can come in a variety of formats, such as single-family units, condos, or duplexes. When it comes to investing, the one good thing about residential is that people will always need a roof over their heads to sleep in, so there will always be a need for real estate. However, there are some not-so-great things about investing in residential. For instance, there will always be a very saturated market that ebbs and flows. It is a very economically dependent market, which requires a lot more time investment from investors and potential landlords. There’s also a downturn in profit since most buyers will want to eventually own the property, which means that the investment rolling in will eventually end.
Commercial Real Estate
On the other hand, there is commercial real estate, which is any property that does not fall under a long-term living arrangement or a government sanctioned park or reservation. This includes a huge variety of properties, such as retail stores, restaurants, hotels, office buildings, and even privately owned parks. One downside to commercial real estate is the higher barrier of entry since it is a harder industry to break into as an investor. However, the perks of investing in commercial real estate are endless. First of all, there is a variety of commercial properties you can manage, so choose a sector that you find interesting. Leases are generally much more long-term than a residential lot, which means more stable financial planning can be done. Vacancy rates are lower, and the ROI is usually much higher than with residential.
Trust the Professionals at Clagett Enterprises for Your Realty Needs
If you’re looking for an experienced property management company, the perfect realtor for your property, or a professional to assist you during your purchase of any home, you can rely on Clagett Enterprises. Clagett Enterprises is a full-service real estate company with almost 30 years of experience in the Frederick and Western Maryland area. For assistance with commercial sales, leasing, management, and development and consulting, contact us online or give us a call at 301-665-6009. To meet our team and see some of our beautiful homes, follow us on Facebook and Linkedin.